Patrick’s comments on Dr Money’s Article – Insurers Not Protected From Risk.
By: Patrick Lim
With regard to financial institutions like full banks and finance companies in the unlikely event of going bust, I heartily applaud the MAS’s move to have implemented the deposit insurance scheme on April 01, 2006.
Here’s some nuggets of info on the deposit insurance scheme:
From 1 April 2006, the deposit insurance scheme will compensate individuals and charities for the first $20,000 of their Singapore dollar deposits in standard savings, current and fixed deposit accounts, net of liabilities, in the event that their bank or finance company fails.
The scheme compensates depositors through a fund built up from contributions by full banks and finance companies. Full banks and finance companies will pay their first premium contributions into the fund on 3 April 2006.
SDIC, a separate entity incorporated as a company limited by guarantee under the Companies Act, will administer the deposit insurance scheme and manage the deposit insurance fund.
SDIC Chief Executive Officer, Ooi Sin Teik, said: “The deposit insurance scheme is designed to safeguard the savings of small depositors. The scheme represents another layer of protection to complement the role of prudent bank management and MAS supervision.”
“Although Singapore is well respected for the stability and robustness of its financial sector, experience elsewhere has shown that having an explicit guarantee in place will provide certainty and confidence to depositors.”
In addition, the mas has been studying (for the past several years at least) the possible implementation of a policyholders’ protection scheme along the lines of the deposit insurance scheme which acts to safeguard policyholders’ benefits (up to 90% of the insurer’s liabilities) should any insurance company go bust.
On this scheme, Mr john palmer, deputy MD (prudential
supervision) Monetary Authority of Singapore was quoted to have said at the lia annual luncheon on Wednesday, march 03, 2004:
“Another important project on which MAS is hard at work on is a policyholder protection programme for customers of life and general insurance companies in Singapore. The programme that we are planning will be inexpensive to operate, should not represent a
significant financial burden to life insurers, and yet will provide protection to back-stop much of the insurance cover purchased by customers of Singapore-based life insurance companies. Once we have completed the preliminary design of the programme, we
will be looking for active and constructive input from LIA and its members to help ensure that the policyholder protection programme is a success and meets the genuine insurance needs of Singapore consumers.”
Just as Christ is the reason for the season, my Christmas wish is that MAS will implement this scheme as soon as possible just as consumers who have taken up policies from Zurich international life and friends provident have a similar scheme in place as guaranteed by the government of the isle of man.
Source: Everything U Need To Know On Insurance